Burning Question: What If the Job Market Never Recovers?

Burning Question: What If the Job Market Never Recovers?

Okay, I’ve sitting on this article for a while and have decided there’s probably NO good time to run it — so I might as well just throw it out there this week and get it over with, in light of some of the scary stuff that’s been happening on Wall Street lately, as well as my desire to explore the topic of career management from all possible angles.

(Editor’s Note: If you’re in a bit of funk in your job search these days, you may want to skip this one. It’s not the most uplifting post!)

Here’s the “burning question” that went through my mind the other day after getting several calls in a row from folks who have been out of work for over a year, despite NO previous history of unemployment:

“What if 8-10% unemployment is the ‘new normal’ and we’re never going to go back to the days when most people could go to college, work hard, and expect a decently rewarding and successful career to follow? Would knowing this for a fact change the way you look and manage your life/career/future in any way?”

Again, just to clarify, I have so special reason to imagine the above scenario is going to come true. But given the turbulence we’ve all been living through these past few years, it’s certainly a notion that’s within the realm of possibility. Without question, I think those of us “older” professionals in the Baby Boomer and Generation X ranks have been conditioned since birth to believe in the infallibility of the U.S. economy — and to assume that “what goes down must come up” in the sense that the market, despite its recent jitters, will eventually bounce back into full fighting form. In my gut, I keep telling myself that if we simply stay patient, and ride this puppy out, happy days will be here again. Would you agree with me on this? Is your sense, too, that as tight as things seem right now, we can all expect better days to be around the corner, if we just weather the storm?

And yet, what if this assumption is totally unfounded? What if things never bounce back in a significant way? What if the fundamental nature of the world economy has changed, America’s best days (at least economically) are now behind us, and our standard of living is now going to continue trending down off its historical peak? Will society adapt to this new reality, and learn to live with it, or will we all just continue to waltz around in a grumpy, unpleasant fog?

This question seems worth kicking around, at least as a “thought experiment” of sorts, given my observation that many people seem to be holding off being happy (for lack of a better way to put it) until the economy gets back on solid footing. Many people right now (as well as organizations) seem afraid to commit, plan, and live their lives in a confident, purposeful way given the conditions we’ve been facing out there over the last few years. Everybody’s in a hyper-cautious holding pattern, waiting for something to change. But maybe all of this waiting, hoping, and assumptive thinking is in vain. Maybe we’re witnessing a permanent structural adjustment to the economy and the sooner we adapt to this new paradigm, the better off we’ll all be.

Just to add fuel to the fire, here’s a recent article from Thomas Friedman that touches on this notion briefly, at least in the sense that he highlights some aspects of the job market that now seem “permanently” different than before. You’ll find some of his statistics pretty sobering. And yet, for what it’s worth, I respectfully disagree with some of his conclusions, since he seems to equate the U.S. economy entirely with the technology sector — which, to me, ignores the huge number of other industries and job sectors (e.g. hospitality, transportation, medical care, etc.) that aren’t quite as subject to being outsourced or delivered over an Internet connection.

So again, as usual, I’m just “throwing it out there” and seeing what you all think. I’m no oracle and for all I know, the market is going to reboot itself sooner than we think and we’ll be back on an upward track, based on whatever mysterious forces affect such things. This summer has certainly been a promising one in terms of job creation in the Puget Sound area, if nothing else, from what I’ve observed.

As the years of this current recession stretch on, however, I’m just wondering how long the emotional fence-sitting among individuals and organizations can hold out. If the current macroeconomic trends continue, how long will we cling to the notion that this situation may be an abnormality, versus the “new normal” in its own right? And if this is the case, will younger generations grow up perfectly adjusted to these conditions and figure out how to live happily within them, even if the rest of us yearn for the stability/security of the good old days?

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8 Comments

I think the economy will get better (I don’t know when) but I also think things have changed forever. Certainly, lifetime employment is long gone and has been for awhile.

The problem for everyone, in my view, is that time isn’t on our side. If you’re over 40 (or 50 or 60), you’re not going to be very attractive to employers if and when the economy comes roaring back. Even if you’re in your 20s, if you’ve been unemployed for a few years and you don’t have any experience, why wouldn’t an employer just hire a new graduate?

Adding to the dilemma is the volatility of the economy in general and some professions specifically. Employers may need a part-time contractor for a period, then need a full-time employee, then the company morphs and the job disappears altogether. How does an individual deal with this?

I’d argue that for a lot of people the answer is starting a business. Be a contractor and have mutliple clients. Or buy a franchise. No money? Get the seller to finance you. This isn’t for everybody and it is not for the faint of heart. But it allows one to have more control over their destiny. Too many are waiting for someone to give them a job. It could be a long wait.

Once you’re self-employed, learn to live on half the money that you would be making if fully employed. Then you can ride out the ebb and flow that is inevitable.

Anonymous
August 10, 2011 at 3:45 pm

I appreciate Matt’s honesty in speaking the unspeakable here concerning whether there will be a “recovery” as most of us equate with a return to much lower levels of unemployment in this country. Here are my brief thoughts on the matter:

1) I agree with those who think a structural shift in the US economy has occurred involving the workforce and domestic employment opportunity. I believe this shift is largely due to advances in technology that have changed many industries, and that the shift is also due to a more connected global economy where even small to mid-sized companies can off-shore operations to save on labor and other costs. It’s no benefit to the domestic economy that the U.S. has no national health insurance plan (our system is employer-based insurance where your employer is expected to provide your health insurance benefit), whatever you think of that notion, because we are competing with countries whose governments provide at least adequate basic levels of health care services to individuals and where employers do not have to shoulder the very large costs of providing health insurance benefits to their employees. This one element alone puts the U.S. labor force at a severe economic disadvantage when competing with hiring workers abroad. As someone who has been self-employed for quite a while, I also know that the cost of purchasing adequate health insurance is unaffordable for entrepreneurs and very small businesses, and many of my self-employed colleagues also have no health insurance benefits, which places individuals at great risk of financial ruin should a health care need present itself (consult personal bankruptcy statistics if you’re unsure on healthcare costs being one of the primary reasons that ordinary people file for bankruptcy protection).

2) I am no longer of the opinion that a college, graduate or professional education equates with relatively certain employment. I have met a few people with highly technical degrees (i.e. engineering, computer science) who are snatched up upon graduation, and then I know others in more traditional fields who have looked for years for employment without much success following investing in their education. I would caution those thinking that education is the key to moving back into the workforce to carefully consider the costs of that education before investing funds, and also considering the most economical ways to get an educational credential if you’re sure that it will be helpful to your employment goals. Despite their assurances, most educational institutions have poor track records at assisting graduates with job placement – ask around for feedback before assuming the career office will be helpful to your job search.

3) Don’t put off personal happiness for career pursuits. I did this for about six years and then realized I was not achieving the career direction that I had been postponing my personal life to pursue despite all of the long hours/after hours investing in career advancement. Life truly is short, and although it can be very difficult to make long range plans not being sure of your income or employment opportunities, try to adopt a mid-range or short-range planning scheme where you can set personal goals that are achievable. It’s another way of taking control back over uncertainty when you begin to live your life as fully as possible given what you know about your circumstances now, and without relying on a pot of gold at the end of a rainbow being in your future.

4) Become more civic minded. This may sound controversial to some, but I think a large part of the fractiousness and grid-lock in Washington DC that drags the economy down is due to the fact that millions of Americans who are middle-of-the-road in their opinions and desires for this country’s future are being shouted out by people on either ends of the political spectrum who are ideological in their views and who will not engage in fair-play and traditional notions of compromise for the common good that is required for a functioning democracy.

The middle-of-the-road people are not VOTING and becoming involved in activities that ensure that the elected officials who have the power to advance or ruin our economy are doing their jobs and thinking of the workforce and what is best for this country’s future. Even if you abhor politics, VOTING regularly is a civic responsibility that when engaged in will ensure that the majority of the people’s will is at least voted into office whether or not it is carried out while in power. It takes less time to vote a ballot every year or so than it does to constantly complain about politicians being ineffective and inattentive to the people’s needs concerning jobs and other important domestic issues.

Thanks to Matt for being willing to give voice to the notion that things may have permanently changed. When we face our fears and insecurities, it’s easier to move forward toward by taking control over our personal happiness and plan for living life in very difficult economic times.

jay
August 10, 2011 at 4:04 pm

A flexible and adaptive attitude is very important in the conduct of one’s affairs.

These thoughts have certainly crossed my mind. What I find helpful is to remember that what we’re experiencing today, while very difficult, is a moment in time. Our parents, our grandparents, generations before us all experienced their “moments in time” where things looked bleak (whether personally, economically, etc.). And things got better. Maybe not immediately, maybe not in that person’s lifetime, but ultimately things got better.

This was very hard to believe during my recent period of unemployment. Incredibly hard to believe, and there were more than a few days where encouragement and positivity were hard to come by. But, to your point about postponing happiness until… why spend your days feeling bad? How you feel is the one thing you can control in these days where you can’t control much else.

Lest any readers of my comments think I’m on Easy Street — far from it. My 18 months of unemployment and subsequent reemployment (in a position making less than half of my prior salary) have had a major impact on my life. But, I find that I have become incredibly resourceful, that I look for ways to economize and find bits of happy and fun that I would have never encountered back when things were easy and the money was good. I am now understanding ways of thinking and being I saw in my grandparents, and NOW see the wisdom they’d acquired during their lifetimes. No wonder so many entreprenuers came out of their generation. I’ll be curious to see if the same will be true in ours, and that of our kids.

Alright — off the soapbox for now. Just a few thoughts prompted by today’s post. Thanks, Matt!

Richarcd McLeland-Wieser
August 10, 2011 at 4:35 pm

Yes… the very structure of the economy has changed, but not much. It has taken two forms; in the developed countries the widening gap between rich and middle class and the slowing down of the “consumption society.” Regarding the latter, it will prove to be a good thing in the long term as the over emphasis on consumption is not a good thing. Though as the developed countries slow down consumption, the developing countries seem to be taking up the slack.

In the short term it seems people will develop “holding off being happy” fatigue. “I’m tired of doing without the _______________ (fill in the blank). They will just go out and buy it..

Wow, just wanted to thank all of you, below, for chiming in with such insightful and heartfelt thoughts about the topic I raised in this post and the current state of affairs out there. You’ve added some great dimension to the discussion and offered some very useful tips and suggestions, I believe, for how people can best adapt to these uncertain times. Again, much thanks for the taking the time to share your perspective…

Anonymous
August 10, 2011 at 8:04 pm

I agree with David’s comments concerning starting a business of your own. The only way you can control your employment directly is to sell your products or services rather than being employed by someone else who can hire and fire at will.

I would also say, however, that current tax and benefits laws are NOT favorable to the self-employed as they pay a 15% tax for the privilege of being self-employed (assuming a pass-through corporate structure) and typically do not earn enough money at least for quite a while to pay themselves the benefits that are associated with traditional employment, i.e. health insurance benefits that must now be 100% purchased by the self-employed, retirement savings funds with no employer match, life insurance premiums, disability insurance premiums, paid-time off (versus when you don’t work, you don’t get paid for the self-employed). Contract employees also have the tax disadvantage of paying self-employment tax and paying for all of their benefits.

The government’s recent “generosity” in terms of the Small Business Jobs Act of 2010’s tax provisions may be helpful for this year or in some cases for a future year, but long term permanent reform of the tax system and benefits system that is more favorable to the self-employed would be enormously helpful to freeing individuals to become self-employed or open a small business in a financially sound manner. If General Electric can pay zero income tax, it would seem fair to most if small business or self-employed individuals received more favorable tax treatment in order to stimulate the economy by operating successful businesses that allow them to earn a living wage and save for their own retirement.

John
September 1, 2011 at 6:06 pm

I recently had a conversation with my brother, a recently laid off teacher, about an Oprah Witney show we both watched in which she said people should “follow their passion” and the money would follow. It may have worked for Oprah but we can’t all start our own talk show and become billionaires. That always was a fiction, but it is markedly so now.

I see at least two major effects resulting from the “new reality” of 8-10% unemployment. First is a focused concentration on choosing a career with the greatest opportunity for employment and job growth. Gone are the days when one necessarily follows their “passion”. I have two small children and, unfortunately, I can no longer advise them to just follow their interests. I will attempt to steer them toward jobs that address “necessities” such as health care.

Also, in terms of managing life, people have, and will continue, to reduce their costs significantly and generally maintain lower standards of living. This is an absolute necessity in today’s job environment and given the need to save for retirement and not rely on any government programs to pay for future costs of living or healthcare.

Regarding starting a business as a hedge against relying on employers, as a business owner I can tell you that’s a LOT easier said than done. Aside from the traditional obstacles, the current recession, stagnant wages for the last 10 years (at least), and increased living expenses (most notably health care) has resulted in substantially decreased demand for discretionary services and products. The same market forces that caused unemployment also make it extremely difficult to start and maintain your own business.

A final thought is that the US has faced recessions and depressions (most notably in 1893 and 1929) before. It’s important to look at our times through a historical lens and see what worked back then. The answers are out there and it only takes the will of the leaders and – more importantly, the electorate – to put make the necessary changes to improve current conditions.